Name: Sir Lyndon Daren M.

Suba Date: 02/14/2022

Grade & section:12 – ABM K Subject Teacher: Noel Salazar

WW
1. A
2. C
3. B
4. D
5. B
PT
1. a.
Given: formula:
₱2,500,000 – outflow NPV = -cfo + 𝐶𝐹1 𝐶𝐹2 𝐶𝐹3 3 + ...
+ 2 +
1+𝑅 (1+𝑟) (1+𝑟)
Y1 = ₱800,000
Y2 = ₱800,000
Y3 = ₱800,000
inflows
Y4 = ₱800,000
Y5 = ₱800,000
0.15 – r
5–t
800,000 800,000 800,000 800,000 800,000
Solutions: NPV = 2,500,000 + + +
1.15 (1.15)2 (1.15)3
+ (1.15)4
+ (1.15)5

NPV = -2,500,000 + 695,652.17 + 604,914.93 + 526,012.99 + 457,402 + 397,741.39

NPV = ₱181,724.08
Answer: The net present value is ₱181,724.08.
b. Yes. The project should be accepted because the net present value is a positive
amountand it is equal or greater than 0. The project is profitable.

2. a. Gives: (Tables)

Poject N Projet Y

YEAR Annual cash flow Cumulative cash flow YEAR Annual cash flow Cumulative cash flow

0 (₱21,000,000) (₱21,000,000) 0 (₱21,000,000) (₱21,000,000)

1 7,200,000 (13,800,000) 1 8,500,000 (12,500,000)

2 4,900,000 (8,900,000) 2 5,200,000 (7,300,000)

3 9,100,000 200,000 3 4,900,000 (2,400,000)

4 6,100,000 6,300,000 4 8,7000,000 6,300,000

𝐵
Formula: Payback Period: = A +
𝐶
Solution:
8,900,000 2,400,00
PP = 2 + PP = 3 +
9,100,000 8,700,000

= 2 + 0.98 = 3 + 0.28

= 2.98 years = 3.28 years

Answer: The payback period of Answer: The payback period of project Y is 3.28 years
project N is 2.98 years

b. Given

Project N formula:
𝐶𝐹1 𝐶𝐹2 𝐶𝐹3
₱21,000,000 – outflow NPV = -cfo + 3 + ...
+ 2 +
1+𝑅 (1+𝑟) (1+𝑟)

₱7,200,000 Y1

₱4,900,000 Y2
inflow
₱9,100,000 Y3

₱6,100,000 Y4

7.5 discount rate – r

4 years – t
4,900,000 9,100,000
Solutions: NPV = - ₱21,000,000 + 7,200,000 + 6,100,000
+ +
1.75 (1.75)2 (1.75)3 (1.75)4

= - ₱21,000,000 + 4,114,285.71 + 1,600,000 + 7,697,959.18 + 650,395.68

= - ₱21,000,000 + 8,062,640.56
= - ₱12,937,359.44
Answer: The net present value of project N is ₱12,937,359.44.

Given:

Project Y formula:
𝐶𝐹1 𝐶𝐹2 𝐶𝐹3 𝐶𝐹4

₱21,000,000 – outflow NPV = -cfo + 1+𝑅 + (1+𝑟)2+ (1+𝑟)3 + (1+𝑟)4 +...

₱8,500,000 Y1
₱5,200,000 Y2
inflow
₱4,900,000 Y3

₱8,700,000 y4

7.5 discount rate – r

4 years – t
Solutions:
8,500,000 5,200,000 4,900,000 8,700,000
NPV = - ₱21,000,000 +
+ 2 + 3 + (1.75)
4
1.75 (1.75) (1.75)

= -₱21,000,000 + 4,857,142.86 + 1,697,959.18 + 914,285.71 + 927,613.49

= -₱21,000,000 + 8,397,001.24

= -₱12,602,998.76
ANSWER: The net present value of Project Y is -₱12,602,998.76
C. Neither of the projects should accepted because both of the projects has a
negative net present value or they are less than 0. This will result in a net loss for
company, so the project N & Y should be rejected.